In August, job additions exceeded expectations, indicating that economic expansion retained steam toward the end of summer. Though the unemployment rate remained unchanged at 3.9%, the big news from this Labor Department report was the spike in wage gains. This metric soared to its highest level since the end of the Great Recession.
It wasn’t that there weren’t any disappointments on offer. Job gains for June and July were revised significantly downward. But August’s figure was in line with average monthly gains over the past year. Once again, professional and business services led job gains. This is why it makes sense to add stocks from this domain to your portfolio at this time.
Wage Gains Surge, Unemployment Remains Flat
Though job additions for August came in above expectations, the unemployment rate remained flat at 3.9%. That is merely 0.2% higher than the lowest level recorded in 50 years. The U6 unemployment rate that includes people forced into part-time work and people only sporadically looking for jobs, also dropped from 7.5% to 7.4%.
Meanwhile, the employment-to-population rate and the labor force participation rate each declined by 0.2% to 60.3% and 62.7%, respectively. However, average hourly earnings increased by 10 cents to $27.16. Consequently, the metric has increased by 77 cents or 2.9% over the past year. This is the fastest pace witnessed since June 2009.
Professional and Business Services Lead Gains
The economy added 201,000 jobs in August, exceeding the consensus estimate of 193,000. Notably, monthly job additions have averaged 196,000 over the past one year. However, job additions for June and July were revised downward by a combined 50,000. While June’s job additions were lowered from 248,000 to 208,000, July’s gains were cut to 147,000 from 157,000.
At the forefront of job gains were health care, wholesale trade, transportation and warehousing, and construction, which added 33,000, 22,000, 20,000 and 23,000 jobs, respectively. However, the largest contributor to job additions was professional and business services with 53,000 new jobs. The sector has added 519,000 jobs in the last 12 months.
Leave A Comment